The leafs would be smart to get him on another short term contract, for a reasonable cap hit (if possible).
Problem though is already eating up 5+ million on the bottom six, and the leafs will need to use what little capspace they have on their RFAs. Not much cash left to be able to give him the raise he'll be looking for.
The Leafs would be smart to trade him at his peak value later in the year if he continues to play like this. The Leafs have done this so many times and it's hurt them, they go after guys who have career years pay through the ying yang to get them here and become complete flops. Instead of extending him get some assets and move him out. He'd be one of the first guys I move actually for these exact reasons. In any other year Santorelli probably doesn't even get you a 3rd or 4th..this year however we could probably get a 2nd for him.
Think about it long term, do we really want a 29-30 year old player taking up 3-4 mil in cap or do we want another pick in a deep draft? I don't even have to think twice about what this franchise needs.